Canada Tax Plan Aims to Compete With US for Jobs
Summary
Canada’s proposed federal budget would make immediate tax deductions available for a wider range of business investments, aiming to lower investment costs and attract businesses. The government estimates the measure would reduce Canada’s effective tax rate on new investment to 6.4 percent, compared with 16.9 percent in the United States, and could add up to 80,000 jobs annually in 10 years.Key Facts
- The proposal is part of Prime Minister Mark Carney’s second federal budget, titled “Masters of our Destiny.”
- Businesses could deduct the full cost of eligible assets in the year they become available for use instead of spreading deductions over time.
- Eligible investments could include computer equipment, software, fiber-optic cable, mining property and rail infrastructure.
- The government says the proposal would expand immediate expensing from about 15 percent of capital investment to about two-thirds and make it permanent.
- Canada’s Finance Department estimates the measure would cost C$36 billion over five years, starting in 2026–27.
- The department forecasts up to 80,000 additional jobs annually 10 years from now; it does not say these jobs would transfer from the United States.
- The U.S. rate cited in the article accounts for business tax breaks in President Donald Trump’s One Big Beautiful Bill Act, signed on July 4, 2025.
- A KPMG survey of 346 Canadian business owners and decision-makers found that 51 percent believed the deduction would encourage new capital investment.
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